Not for the first time, investors are querying why Wesfarmers remains wedded to its insurance business, which is facing a second year of poor returns after another blowout in claims.

There was speculation in December that Wesfarmers was poised to make a bid for IAG to build scale in its Lumley, OAMPS and WFI insurance operations, which account for about 4 to 5 per cent of the local market. But after this week’s warning of a 74 per cent slump in insurance EBIT to $17 million in the December half, the question is whether Wesfarmers should be exiting rather than bulking up.